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tv   Worldwide Exchange  CNBC  October 16, 2012 4:00am-6:00am EDT

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. welcome to worldwide exchange. these are your headlines. banking sector focused today shifts to goldman sachs and five dow components releasing numbers. >> roche sees q3 revenue rise. ceo says his company's performance will not be affected by the outcome of the u.s. election. plus top oil producers forge ahead with ambitious output targets banking on stronger chinese demand.
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and president obama and mitt romney are set for round two of their presidential debates tonight with the task of winning over undecided u.s. voters. we start to get the into the meat of the week. advancers outpacing decliners by a little more than 6:3. yesterday ftse was up 0.2%, dax up 0.4%. this morning another third percent gains for the ftse 100. c 40 up 0.4%. ibex up about 1.10%. s&p putting a negative outlook on biggest spanish banks. let's show you where we stand. not impacted on the stocks.
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as far as bond issues are concerned, we have a t-bill auction coming out today in spain. we'll get the results of that in about an hour. 5.82%. spanish yields slightly higher than where we were yesterday. italy is fairly contained. the big test for spain will be on thursday. first time we've had a primary debt auction out of spain since the s&p downgrade last week. we'll keep our eyes on gilts, as well. uk inflation data coming out half past 9:00 london time. currency markets, euro-dollar, we got up to about 1.2979 yesterday. we're back over the 1.30 mark. dollar-yen a little bit firmer getting back towards 1.79. aussie dollar, 1.0278. no real indication of anymore rate cuts to come, so it has strengthened a little bit.
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and that sterling you can see also firmer over 1.61. expectations cpi will come down and that may allow more qe possibly in november. so we'll see whether ultimately it stays. let's get a look out of asia. asian markets picked up steam. the nikkei outperformed ending higher by a strong 1.4%. softbank shares rebounded nearly 10% leading the rally and other mobile operators. more on that deal with our guest coming up. shanghai composite ended flat. but phrma companies and military stocks outperformed. shares in hong kong managed to eek out modest gains helped by developers and tech shares.
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but china holdings slipped over 4% of a toeof a dropped bidses. meanwhile australian banks and techs helped the asx 200 finish in the green. rio tinto lost ground after they both plan to lift output after china recovers. more on that coming up, as well. sensex just turned negative. >> thanks for that. catch you a little later. >> positive tone for markets this morning. basically citing u.s. retail sale strength yesterday. citigroup better than expected earnings. it reminds me we were talking about ben liechtenstein yesterday saying essentially that he feels like this is more of a melt up in the absence of
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anything really going on. and i want to mention, too, remember yesterday i was talking about wd 40. >> they slipped. >> they did. so we've had such a mixed batch of reports from the u.s. consumer. on the one hand, improvement in sent the, retail sales. on the other hand, wd 40 shares there down nearly 7%. 9.5% in after hours trade. they said sales fell 6% year on year. higher input costs. some currency headwinds, too. but bottom line if you're trying to figure out how else do you play for example a real estate recovery, because we've seen valuations now so rich for the home builders, for example, you look to a wd 40, it's not like this is a sure bet at all. calls in to question just how solid it is. >> anyway, on this point about
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with a we're pri what we're pricing in, andrew, we have some chinese growth data coming out later in the week. nice to see you. where do you think we're at in this ever lasting battle between the price of assets and the fundamentals? are we fairly valued? >> a lot of people are betting on a hard land willing, but there's no increased evidence of that. we're seeing signs of some improvement. exporters are up a little and so is import, but also also even the service sector has registered some improvement. but the improvement is not strong enough to switch back to the old model of high growth. because we're at a turning point in china's economy and a turning point is a conference of three sort of different trends.
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first of all, turning point from export led kind of economy to a more balanced economy. and then secondly, the export markets are not entirely only in the developed countries, but also markets for china in emerging markets themselves. so that's the second turning point as the emerging markets are assuming greater importance. and the third turning point is that china in particular is adjusting from high growth model to a more sustainable lower growth model. so all these turning points are coming together at a time of major leadership transition. so you can see there are a great deal of uncertainties. >> i also wonder you're right that these transitions are happening perhaps more slowerly than people would like, and just to go back to the point about what is the consumer in the word, there is a sense that the u.s. would be handing that mantle over to the chinese, but we're not seeing that.
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we're seeing chinese consumption flat or even falling as a share of gdp. meanwhile consumers in the u.s. actually are to some degree pulling more of the weight than expected. >> and there we're seeing also because of the whole world market is weak and the u.s. economy even though there are some up signs, but still is not coming to a point where the u.s. economy is going back to the high growth model, especially consumption sentiments are still relatively weak. because pangs in spite of huge liquidity are not prepared to take on a lot of credit risks. and consumers got their fingers burped, so they're unlikely to sort of come back to this spending kind of euphoria again. but then as far as china is concerned, we are seeing some
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major growth in china's consumer markets, but starting from a very low base and there's no way that china could replace the kind of proportion in the whole world consumer kind of market. but if you look at the growth rates, the margin of growth, there is no doubt the emerging markets and china in particular is going to account for a larger and larger proportion of world growth. so there's a change as well especially in china's consumers. we're talking about the surging china's middle class and you'll find them not in the big cities, but also in the lower tiered cities. in the provinces. according to mckenzie, the latest research, china will build 221 new cities by the year 2025. >> well, nothing can go wrong with that. china must know it needs exactly
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221 cities. >> well, you look at the mckenzie research, several pieces of research based on the proprietary data, 221 new cities, it could be growing from mid size villages to mid size towns, mid size to bigger towns. but in total, china will add something like 300 million more urban ite you a urbanites by 2025. >> so investors should stay wrn t within the longer term. >> all right more to come from andrew. resources minister says the boom is over. >> and we'll get the latest read on uk inflation. the rate is expected to fall to
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its lowest level in three years. >> meanwhile new car sales are sle sliding in europe. >> and we'll be heading out to new york for a preview of johnson & johnson earnings. what one analyst says about the potential impact of the election on the health care sector. and shares of telecoms has rebounded after laying out the plan to buy 70% of sprint nextel. investors had been worried about softbank's debt load and the possibility of share dilution. joining us for more is senior director at ict practice. a.j., thanks for joining us. some have described thises as a $20 billion sort of pulled by the softbank ceo. how much risk is there in this deal, do you think? >> if you look at the financials from a softbank perspective, it is a risky deal.
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considering the fact that sprint has a lot of debt on its balance sheet, and sprint one of the things too is it's maturing in the near term. so given these situations, i think the it's a bit risky, but i believe softbank is taking a longer term view more than five years horizon. softbank had a lot of interest in the u.s. markets. they made a couple of acquisitions in the smaller platform, advertising and all that. and given the discrepancy between dollar-yen, i think it makes sense for them to make an acquisition in the u.s. market right now. >> do you think they are then going to load up -- is sprint nextel going to keep the acquisition plans its has for clearwire and others? is it going to bulk up even more?
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>> sprint nell text will have a bit of cash. $8 billion cash with this soft bank owing acquisition. 70% stake. so that will leave sprint and it will be interesting how sprint will be using the $8 billion. my bet is that sprint will be looking to be more aggressive. they can use to be more aggressive on the clearwire acquisition. so i would think they would be a bit more aggressive on the upcoming spectrum auction. >> where do you think it creates opportunity throughout the rest of the sector, as well? who else may benefit or potentially be opportunistic here? >> i think the u.s. telecom industry. the way it was emerging, smaller players were not really make much head way. so with this acquisition, now
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sprint has some leeway and it will be interestediing to see i the next few quarters. i think at&t, verizon and sprint can make a big head way now so that will be interesting for the u.s. consumer in general. >> may i ask a question? speaking from where i'm coming from, china market and so on, of course you know that the chinese are exporting their capital and would like to go into the m&a kind of feel especially in advance countries including the united states and europe. what's your take on the opportunities for china companies, perhaps not the high profile, but even in the mid cap and lower cap kind of companies, would there be opportunities for chinese companies, as well? because it needs to export it
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capital and rather than locking everything into the u.s. treasuries. >> definitely even for chinese company, they'll be looking very closely at some of the many opportunities within the u.s. market. and not just u.s. in the european market, there are some m&a opportunities moving forward. so it will be interesting because you're not talking about just service providers. you could be looking at players at other icd value chain lay pl. so we do expect some moves overseas. >> a.j., thanks very much for your thoughts. ross, i was just going to say that the deal also comes at a time when at&t and verizon may have been getting pricing you power with customers and the question is whether sprint will now spoil the party. in any deal, ebc board of
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governor governors appointment held up because of his gender. six of the largest blocs pointed out systemic gender bias. >> and twitter has been interviewing potential candidate, but none selected so far. >> and one high profile female executive, marissa mayer, is back in the office at yahoo! after taking just two weeks for maternity leave. she announced her return on twitter yesterday and wasted no time in making a big splash. she fired one of her former google co-workers and named dekad decastro. >> two weeks. >> yeah. it's a remarkable turnaround. she said when she took the job
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that she wouldn't be out long, but i just -- >> i'm not going to -- two weeks physically possible? >> i think maternity leave over here is longer than -- >> its eat physical recovery. anyway, the presidential debate tonight will be moderated by candy crowley, the first woman to moderate a presidential debate in 20 years. >> all of that brings us to this point this morning. there's a clear focus on trying to increase sort of gender in the workplace. so we want to know, should gender be a factor in choosing who to hire? and then second is should there be sort of particular quotas to be elevated to the point of trying to fill 15% of board -- >> should be no factor. no bias either way. that's what the law says. unless you're going somewhere like norway. >> but isn't it that the law can be specifically pro female
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hiring when they're underrepresented? >> only if you decide you're going to have a quota based system which is what they have in norway, but otherwise gender should not be an issue. >> but you're seeing all these companies and boards deciding that it should be. so we want to know what you think. worldwide@cnbc.com, @cnbcwex. but bottom line, should depend der gender be a factor. >> you're talking about positively. >> yes.be a factor. >> you're talking about positively. >> yes. >> and the point is you have positive discrimination is what you're saying. i think that's what that question is supposed to be saying. meanwhile, two of the world's biggest miners display true grit saying they're not letting anything slow them down. more on that when we come back. bob...
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oh, hey alex. just picking up some, brochures, posters copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty. here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. on banners.
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miners striking a more positive note despite more volatile conditions.
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>> rio tinto ceo says the business is resilient and operations are performing strongly. those comments coming alongside a 5% rise in iron ore production no the third quarter. rio has also maintained its 2012 production guidance at 250 million tons. share paired their earliers losses to finish down by around about 1%. china's growth is being maintained. exports are recovering which means the iron ore price should recover to around $120 a ton over the next few months. those comments come as a jump in production for the quarter. production numbers will be revealed on on wednesday. back to you. >> head of asian mining research joins us. so what do you make of those bullish outlooks bearing in
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mind, of course, the australian research minister says the boom is over and whichever way you cut it, we have slower chinese demand? >> we're actually in agreement with the view. we put out a report about three weeks ago when we expected iron ore prices to rebound on the back of restocking and adjustments. and we have an average price of $122 for this year and $119 for next year. so we are in agreement with what is expressed would i these companies. and we are positive on iron ore for the very simple fact that we think we now have capital flows back into emerging markets and we've seen stabilization of demand and we're hopeful. >> those back into emerging markets. are you alluding to any impact from qe-3? >> absolutely. we have a strategist that puts out a series of three reports
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where we talk about the impact of qe-3 on on commodity prices and on the positive effect of commodity prices and also we're happy with the restocking aspect, as well which is certainly playing out in iron ore. >> this raises the issue as to whether some of the rebound we've seen is basically a dollar effect or whether there's something real there. are you seeing signs of real demand picking up in china or at what point to you realdid you r strength? >> i think right now obviously as we go more in deeper in the fourth quarter, we'll see what seasonal upticks we have. so we're obviously looking forward to some sort of more positive developments there. but we're very comfortable with our 1 #$122 and $119. >> so companies may have legitimate basis for saying that they'll start -- not only
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expecting a rebound, but that they should plan accordingly. >> correct. i think what's very important for us right now is that we look at the pulse of the chinese economy, when the more accommodative monetary policy will help. >> so if your forecast is right on iron ore, which is the company, the mining group, with the best leverage to that up side in price which i suppose would then be at this moment the best purchase? >> well, that is a very interesting question. unfortunately, i'm not been cleared to actually make any specific company recommendations on this program. so i have tole apologize on that one. >> all right. s i was just reading your note which is suggested there was a company there. but we'll move on from that.
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but gross margins improve, iron ore traders are looking to restock. what happens as we go in to next year? >> well, we're hopeful that the chinese economy continues to stabilize. we're hopeful that steel production continues to grow gradually from the current base it has right now. and we're also hopeful that some of the iron ore supply is either delayed or perhaps even put back. and then we'll have a very sustainable and sort of stable iron ore price outlook. >> all right. good to see you. thanks for that. andrew will stick around for a little bit more. >> and still to come on on the show, we'll have more on australia. find out why the rba isn't sounding alarms just yet. >> plus uk inflation data right after this.
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momentum in the banking sector and focus today on goldman sachs. >> roche third quarter revenue
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rises. ceo says his company's performance will not be affected by the outcome of the u.s. election. iron ore producers forge ahead with ambitious output targets. they're banking on stronger chinese demand despite volatile prices. i can tell you cpi is up 0.4%. the annual rate 2.2% on the year. that's the lowest since november 2009. that is bank on the expectations, as well. core cpe running 2.1% on on the year. that's a little bit stronger than the forecast of 1.9. rbi 2.6% and that annual rate below since december 2009.
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>> september rpi up and a half a% on t a% on the month. so running a little hotter than the cpi, but never the less some of the lowest annual growth rates now since the recovery really. >> house price inflation a little bit slower. up 1.8% on the year in august versus july. so that number probably shouldn't be too much market reaction. peter, is that slowly easing the pressure on consumers in the uk? >> it certainly is temperature real income growth has been hit hard by the high income rates on inflation. that's more because of things happening a year ago that have dropped out. and in a way, the interesting question is whether it will come town any further than the 2.2. my suspicion is that it will probably hang around that level for a while now.
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>> input prices were down, weaker than forecast, but output prices were a little bit stronger than expected, up half a percent on the month. >> and you wouldn't expect margin building. so i wouldn't necessarily see much into that. so i think the key point is everyone was expecting inflation to come down. for a long time we thought it would undershoot the target considerably. and that's some of of the reasons why some of the members are a little bit more reluctant to put -- >> where does it leave us with further qe announcements in november? >> still a decent chance that they will do that.
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a lot are getting skeptical about whether that's really helpful, so i don't think there's necessarily a strong consistency for that. >> andrew, step in. >> i'm wondering because the eurozone is really not out of the woods yet and of course the eurozone is the uk's largest market. so what about the remaining uncertainty? how will it impact on the share price and consumer and investor sentiments? >> the uk economy is entirely enslaved to what's going on in the euro at the moment. one of the reasons it hasn't picked up more quickly is precisely because the euro is in such a sorry state. so until we see a meaningful uptick in sentiment in europe, i'm afraid the uk will be bumping along with very low growth rates for the next year or so. very difficult.
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>> it always strikes me being over here and reading so many pronouncements by the government to encourage business friendly measures and so many different aspects of government, is there anything to that, is it just sort of political rhetoric, does it need to be the case that all the agencies and companies make more of an evident to reach out to other markets? >> i think the uk is a pretty business friendly environment to start with. so i think we're expecting to hear the dwechgovernment make t announcements, but really that's only mucking around the edges. the big drivers of growth will be the macro backdrop that we've been talking about. >> so if anything, they should try to resolve the uncertainty, but if that were easy, i'm sure we would have done it all right. >> peter sticking around for a bit more. and we'll have more from andrew. meanwhile european stocks up about a third of a percent.
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ibex up a percent. not bothered by the outlook negatives from s&p on the banks. >> take a look at what's happening in the bond space. spanish ten year is moving higher. italy's still below the 5% level. bunds in germany at 1.49%, but the gilt in the uk creeping a little higher after the inflation and home pricing. we'll take a quick look at the australian dollar. strengthening after the rba's latest view of the economy wasn't quite as gloomy as many investors had expected. the rba still expects australia's resource sector to solidly contribute to overall growth and most economists are expecting another rate cut when they meet november 6. a little bit of chatter to the
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rba could be more aggressive. >> one should not rule out the possibility of 100 basis points reduction over the next two quarters perhaps. of to see if the demands are
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uniform across the commodities market. a number of metals but with the you are with anization going on, there are certain demand for melgts like copper that will continue. >> just to be clear, though, when you're talking about the 100 basis points, do you have a view on the likelihood that the royal bank of australia here going forward responds to conditions perhaps some of -- perhaps piling on the move in china you say we might expect after the leadership transition with its own set of cuts? >> there is a chance that the largest and fastest urbanization process in human history, so this will sustain the australian economy for a very long time.
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and i think there is no doubt the australian economy would be riding on this crest. but what i was trying to point out is that because different companies have different positions as far as regards different commodities, so you've got to be very careful which commodities you talk about. because there was an overstocking. but i think overall, the australian economy is almost tied to the chinese economy now and the chinese economy is moving to us another kind of model, maybe a less high growth model to a more sustainable model. so the rate of growth may also be translated back into australia. so again you have to take that into account, as well. >> all right. andrew, thanks so much for all your time today. meanwhile germany's finance minister says an overhaul of the eu treaty is needed to deepen integration in the eurozone and has proposed integration of a currency commission, this person would oversee national budgets.
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schaeuble says the commission should require unilateral decision making powers and be able to veto budgets. >> that proposal apparently coming later in the year. >> i bet that's going down well in paris. mexican president told reporters after meeting with rajoy that the spanish prime minister is confident of securing an appropriate deal with lenderses. the ft reporting spain is ready to let the ecb buy its bonds, but the impact of the decision on italy and other eurozone countries is delaying a request. and in fact he's talking to local press saying it would cost italy something like 1.5% of gdp to support aid to spain there. angela merkel is thought to be softening her stance on greece telling a news conference there would be no uncontrollable events in the eurozone and that while athens still has a lot of work to do, she wants to stay in the eurozone. meanwhile the country's finance minister said yesterday a deal
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with the troica appeared unlikely before this thursday's eu summit contra difficulting comments by the prime minister over the weekend that in fact one would be. and portugal has delivered its harshest austerity budget on record. protesters set fire to a huge model of a executer memory stick in protest. the measurements will take away the give lance of one month's wages for many workers. the governor says they're necessary to cut the national debt. the imf has already come out and sort of admitted it's made a terrible mistake with its programs in europe. the fiscal multiplierses aren't half a percent, it's up to 1.5. i.e. the medicine is almost three times as bad as they thought it was going to be. so why is portugal still having to do these things? >> the difficulty with the imf's advice, correct as it may be, is that for countries that don't
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have market access, if you're going to ease up on the fiscal austerity, somebody else will provide the lending. and in a way that's the missing piece. >> but if fiscal austerity damages your growth even more, you're making the situation worse. >> are you in the short term, but eventually the austerity has to be done at some point. it's about the sequencing. that's the fundamental question, who is going to -- >> if you look at the original imf forecast for greece, there was supposed to be growth this year, have significantly higher growth next year. clearly we're no where near that. so when we say, yeah, in the long term we get some growth back, after, what, ten years? how far are we going to push this into depression? >> i mean, the fundamental question is if they have done less austerity, they would have needed to borrow more from the eu countries. and at the moment, that
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willingness just isn't there to -- the money is not going to be on the table. so it's different for spain and italy because they're in a situation where they're still in the market. so the idea that their austerity could be eased up a little bit is possibly on the table. >> the trouble for portugal is that its economy is fundamentally almost uncompetitive. what's its basis going to be going forward. >> the competitiveness adjust the needed in all of these countries is happening very slowly. and ironically, the depth of the recession is probably helping that correction. >> here's the question. how many people do you have to throw on to the unemployment pile, right, to regain competitiveness. and is that actually justifiable? >> that calls in to question the ability to make wage cuts more significant. in fact there was a sense of in the u.s., it was really the absorption there that helped offset greater unemployment. >> yeah, the problem for a lot of these countries is because they're so ring i had, it's very
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ha rigid, it's very hard to get the wage cuts. the more flexible these economies become, the easier it is to force the competitiveness changes through. >> spain has sold 3.4 billion of 12 month treasury builds. the yield 2.86, has come down since september. yield 18 month 3.07%. again, slightly lower that be the 3.15% on september the 18th. so the funding costs are okay on the t-bill in the sense that they're slightly lower than they were in september. if spain -- we have a big auction on thursday. but if they can keep funding themselves okay, might be december, january before an aid
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request? >> the only reason yields are as low as they are is because of the expectation. so my expectation is that they'll go for an aid request probably the end of this month, early november. >> why won't they wait until the referendum? >> i think that's a risk. they'll wait until the regional elections next week i think in catalonia. calethio, sorry. but if they wait until the end of the year, chances are yields will get pushed up and then tell's be forced into taking the credit line. >> if you push them up, the ecb will push them down. >> in the perfect world, that's the way it would work. but the idea that you can have the boot straps equilibrium is a risky one. >> is moody turning it into junk status going to be a trigger?
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>> it could be. and i think that's one of the reasons why spanish yields aren't a one way bet. obviously if all of these things go through well, then yields could go even lower and that makes spanish and italian yields good. but if spain were to be downgraded to junk and they started to drop out of any of these bond indices, then it would be very hard to push against that force. a lot of buyers of bonds -- >> you're not allowed to hold them. >> right. so you effectively need three down grades between any of the three. and at the moment, i don't think that's going to happen. i think if they go for the credit line, that will make it a lot less likely. >> what i love, too, is the discussion about whether spain should or shouldn't be rated at junk status and we're asking if
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a bailout. implicit is the sense that it's not investment grade certainly. >> but if you have big finance behind you, the eu prepared to provide you financing, that helps your status. >> absolutely. just still kind of remarkable that we're at this point. >> peter, good to see you today. >> thank you. we'll today a short break. still to come, car sales in europe are on a slippery slope. we'll find out which carmaker is still gaining some traction with drivers.
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>> peter, good to see you today. >> peter, good to see you today.
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twitter is searching to add a woman to its all male board. no candidates have been elected so far. google, apple and microsoft
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already have women on their boards. earlier we asked should gender be a factor when choosing who to hire. lance says it should be the best person for the job regardless of gender. anything else is discrimination. gender is not an entitlement. we want to know what you think. worldwide@cnbc.com, @cnbcwex, or reach us individually. and, yeah, ross, gender i think is a factor in being hired, hopefully that's not why i'm up here with you. >> no, absolutely not. meanwhile strong sales of cancer medicines helped give roche a boost in the third quarter. sales rose by 15% to just oefl $12 billion which beat analyst expectations. carolyn roth is with us in zurich for now. how are investors reacting?caro zurich for now. how are investors reacting?expe.
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carolyn roth is with us in zurich for now. how are investors reacting? >> definitely a solid set of numbers. no major surprises on the negative or the positive side. now let's talk about the main driver behind this slight beat in terms of the top line. as you mentioned, revenue for the third quarter rose by 15% and strong beat was delivered by the phrma unit. it's the oncology franchise, so we're talking blockbusters by three drugs that accounted for some 52% of overall sales in the first nine months of the year. on top of that, roche also confirmed guidance which maybe was a little bit of a letdown because some analysts had expected that maybe because of the strong oncology franchise and the weaker swiss franc maybe roche would actually raise the guidances for the phrma unit. now, this morning we spoke to the ceo of roche and we asked him about the outlook for 2013 specifically with regards to the impact of the fiscal cliff on
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the u.s. well, he was actually quite optimistic. he said that they're still expecting solid growth for the u.s. regardless of the fiscal cliff and regardless what happens at the presidential elections in most of. for europe, he sees a declining market and he still sees strong double sdindigit growth for the emerging markets. reautos like renault and daimler suffered a drop in demand, but bmw bucked the trend. >> a huge decline in greece, 50% year on year. it also reminds me of a story recently noting italian bicycle sales have surpassed car sales
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now. so a lot of moving pieces to this market. a lot of reasons why it's remarkable that the automakers have done as well as they have. >> the international sales of the likes of mercedes, audi, have done very well. so europe is a problem. which is why the bulk mid size manufacturers like fiat are having problems they are. volvo shutting down production -- >> at one of it plants. from 56 cars to s ts to 50 car wasn't enough. if anything, the bicycle manufacturers are doing per p. and that's one market for wd 40. >> and biking grows in london. >> they're like rabbits. every time you turn around, there's 12 more bikes. let's take a look at the agenda
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on asia. thailand central bank holds its rate setting meeting. likely to leave policy unchanged thanks for benign inflation. and malaysia will post september cpi figures. and the new york fed has september thousands of libor related documents to congress in a second round aimed at showing the central bank took action to try to fix problems with the rate setting program. the house financial services committee has been investigating how the fed responded to when it became aware that global banks were manipulating the libor rate. latest documents include internal communications with the new york fed and e-mails and transcripts between the fed and u.s. and uk regulators. >> now, some of state street's biggest shareholders reportedly want to oust jay ho they're frustrated with the pace of cost cuts. they want new blood.
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last year nelson peltz did criticize state street's pay practic practices. shares in frankfurt this morning are up 0.2% in trade. state street reports third quarter results today before the open. and john williams says strong measures recently taken by the central bank should spur better growth in the u.s. economy. williams who is an fmoc voter said the fed will keep adjusting as necessary until the job market improves substantially. he says the fed can't solve all of the economy's problems. perhaps a hint there to congress that the fiscal side is just as important. >> it is. and apple has reportedly nabbed one of the top executives to run its siri unit. it's hired the co-founder of
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amazon's search at business. >> how many searches can you to? >> anyway, they provide search results for amazon and other retail sites. p apple lost two of the people who created sfiri voice recognition technology. the bell will sound tonight for round two of the presidential debates. president obama and mitt romney will face off at hofstra university in new york. it's a town hall format. the latest polls show pretty much a dead heat with president obama leading romney by a slim 49% to 46% margin, though other polls have shown romney with more momentum of late. you can tune into cnbc's coverage from 7:00 to 11:00 p.m. eastern tonight. >> long island has been less affected by the economic down turn. >> that's one question we want
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to put to our guests when we talk with this next hour. because we will head out to d.c. for an early preview of what to expect. >> and also still to come on the show, jpmorgan last week, citigroup yesterday, today it's goldman sachs. we'll discuss what to expect.
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here are your headlines today from around the world. president obama and mitt romney are set for round two of the presidential debates tonight. the task of winning over undecided u.s. voters. >> global stocks in the green temperatu. focus today moving to goldman sachs. >> and roche sees third quarter revenue rising. ceo says his company's performance will not be affected by the outcome of the u.s. election. also iron ore producers
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forging ahead with ambitious output targets despite volatility in prices. investor snapshot says october german economic sentiment index is minus 11.5. it was minus 18.2 in september. expected to be minus 15. current conditions index 10 points versus 12.6 in september.
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nasdaq and s&p 500, a familiar picture here with u.s. indexes which we've seen futures in the green, momentum heading in to the session and then a struggle throughout the rest of the trading day to maintain. let's take a look at the foot city global 300. markets pick up in just the last 90 minutes or so. the question becomes whether positive momentum can continue with goldman's report today. european bourses, pretty positive mood continuing across these sessions which have added roughly these levels for a
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couple of sessions. the question is whether the rebound is real. >> what's interesting is spanish banks are firmer came. we see that rise in the ibex. this morning we had a t-bill auction out of pain aof spain a raised more than they wanted to. you get a big test on thursday, we'll have about 4.5 billion of three, four and ten year issues coming up.
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italian yields still a little bit lower. we did have cpe inflation numbers out of the uk. annual rate as expected. so still the chance the bank of england may add to more qe in november. aussie dollar holding on on to its gains. no real indications about whether they'll cut further. euro dollar just about on the 1.0 level, as well. let's check in with what's happening in asia today.
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the nikkei outperformed ending higher by a strong 1.4%. softbank shares rebounded nearly 10% leaving other mobile operators. banks that will finance the mega deal to take control of sprint also got a boost. brokerages turned negative, but phrma companies and military stocks outperformed. shares in hong kong advanced to a more than five month high. but china gas slipped over 4% after sinopec dropped their take overbid for the company. elsewhere autos and textures lending support to the kospi.
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australian banks and tech shares helped out the asx 200 finish in the green. metals rallied, but rio tinto lost ground. sensex not able to track the gains. lower by a quarter of a percent at the moment. ross, back to you. joining us for more on the markets is charles bitterman from the states this morning. good morning. we've seen this better risk environment as described, but there's doubt as to whether it's sustainable. what do you see in your figures that suggests whether the rally can last? >> we did have a injection of liquidity into the market with the softbank takeover of the cellular company. the name escapes me. i've only had half a cup of
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coffee so far. prior to that, there was companies had been net sellers of stock by about $30 billion which was decidedly the most negative stretch of liquidity for the market since the end of qe-2 back in june of '11. >> sprint i think is the company you're referring to there. >> sorry. >> we appreciate you getting up for us. so what you're saying is that from a contrarian point of view, fund flows were pointing toward equity performance? >> yes, this week we had 12 billion injection of cash. when a company takes over another company for cash, shares disappear, it's like more money chasing fewer shares. that's in essence my theory on the market. >> i want to talk broadly for a second.
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if there's a sector of markets generally around the world it's credit, securitized products. how much rin investors channeling it in that direction it and not the equity market? >> that's the best performing market. if you have the central banks buying paper, the smart money is selling paper to the central banks at a profit. so there's this bubble. the new bubble is securitized credit. prices have gone to the moon. tremendous demand. huge in-flows in to vehicles that invest in that. and so snrt banks have blatantly admitted they look to raise asset price respect bonds and stocks to hope for a wealth effect for the rest of the economy. >> charles, you're very stringent there. some have hesitated to describe the secure sized product that we're seeing there as a bubble. i guess regardless, though, of where we are at the point in that cycle and it's clear that it's quite a strong one, what
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does this mean for equity performance going forward in your view? >> well, to me i actually believe the bernanke put is dead, that the market went up 15% from when the fed pr guy also known as wall street journal reporter early june previewed that the fed would announce qe 4, so the market went up 15% from early skrun through september 15th. the market peaked the day after the fed announced the current q empty and the market's been down every since and companies have been net sellers except for the softbank acquisition. the last time we saw 1167 16781 april slash may. they're seller, not buyers.
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>> your point about what signals we're seeing is an interesting one. are there other factors that lead to you believe we're perhaps at an april/may period? >> well, the companies have been selling -- flow trade, money going in to the market, has been the sole source of new money, taking prices higher in germany, in the united states. and that stopped recently the last month or so, companies have become heavy sellers. so i think the market's left dating on the belief that mr. bernanke -- mr. draghi has the markets back and they won't let the market decline and i don't think that's real. i think that's just a myth at this point. >> okay. we'll come back and talk about that play in just t a second.
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meanwhile the bell will sound tonight for round two of the presidential debates at hof have a university, this morning. it's a town hall format with the men getting questions on domestic and foreign policy from a group of around 80 you beunde voters. coverage of the debate starts at 7:00 and will conclude at 11:00. >> want to quickly bring you this news, as well. we've already seen spain earlier doing a bit of a t-bill auction. now greece coming to market, as well. they've sold about 1.6 billion euros of 13 week bills. the yield 4.24%, down by about six or seven basis points from the last time they went to market. bid to cover ratio down, as well. 1.9% and for what it's worse,
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that sale did include a 30% tranche that was noncompetitive. not a bad return for a 13 week period of time. but that doesn't explain why there weren't as many investors interested. a deal could see appointed to the board of governors by the end of the week. the appointment was held up because of his gender. twitter is currently searching to add a woman to it all male board. the micro blogging platform has been interviewing potential candidates, but then have been selected so far. major tech companies like google, apple and microsoft all have women on their boards. and one high profile female executive, marissa mayer, is back in the office at yahoo! after taking just two weeks for maternity leave. she announced her return on
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twitter yesterday and wasted no time in making a big splash. she's hired a former google co-worker to be yahoo!'s new coo. decastro is currently vp of partner business solutions. >> i find it amazing, two weeks. >> we had one viewer write into say someone he worked with was back it in the office after a weekend. >> third child is slightly easier. >> is it? >> anyway, meanwhile, so what do you think, should gender be a factor in choosing board members or anything else? i think what we're asking is should there be positive discrimination if one part of the spectrum is underrepresented, should you have positive discrimination to raise the ratios. >> should you interfere with the market, i guess, in that sense. >> that's one of the subjects we're discussing today. worldwide at cnbc, @cnbcwex.
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in other words, they have put quotas into get more fee nail represe female representation on boards. still to come, two wall street giants will have earnings this week. we'll preview what to expect.
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roufrnd two of the presidential debates tonight. >> goldman reports today. >> and euro trading higher after economic sentiment monger mannen investors improves in october. september cpi out at 8:30. consumer prices expected to rise half a percent. at 9:15, september industrial production report. this is a key one. and at 10:00, national association of home builders. will the rebound continue. coca-cola, j and j, domino's, all among the companies reporting results before the
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open. we'll also head out to new york for a preview of johnson & johnson earnings to find out what one analyst says about the potential election impact on the health care sector. but first goldman and morgan head to head again. the question is given goldman's better share performance, will that differential continue. >> citigroup got a good reception. >> u.s. banks in general, it's been jpmorgan, city. even wells fargo a little more mixed on the headline. what will be tricky with morgan stanley is their headline figures won't necessarily reflect what's going on in the business because there's this of the credit spreads have narrowed and what not. >> so you reckon goldman will beat morgan?
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>> it end its to pay off to bet on goldman. >> we also have seen estimates rise for goldman relative to morgan in the last just several trading days worth. so bottom line, expectations, the whisper number, is probably a little bit higher for goldman than morgan. protesters have taken to the streets in portugal. more coming up.
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european stocks advancers outpacing decliners by a little bit more than 7:3. how is that leading to futures? >> u.s. futures giving up some of the earlier gains. dow jones expected to add just shy of 13 points at the open. a couple points for the nasdaq and s&p, as well. the real question becomes is this trading session going to be a repeat of so many recent ones where we start with gains heading into the the session and sort of struggle to maintain. >> dollar up against the yen,
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don't against everything else. the aussie, the pound and the -- i was going to say the euro. better than expected this morning which suggests if you read the tea leaves we'll get more of a soft landing in the german economy rather than the hard landing. but the problem with this survey is that it's investors, so they are very much swung around with what he's happened in the capital markets. >> and keeping with our women this business theme, b of a has reported margaret ren as its china chairman. nevertheless, let's move on. high dividend etfs may be one segment to look at if you're reaching for yield, but charles bitterman says real value can be
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found instead of portfolios of coys who use free cash flow to shrink the amount of outstanding shares. charles, has the strategy paid off? >> yes, it has. o ours outperformed the russell 3,000 and the s&p by about 250 basis points first 12 months of operation. or actually 33% return over the last 12 months. and the major dividend etfs have underperformed the market. so there are two ways companies can give cash back to shareholders. one is dividends. second and more productive way is by reducing the number of shares using free cash flow. and actually the dividend payout ratio is now at the lowest level in many years at about 32% versus well over 50% historically. and in part that's due to the expectation or the fear that
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there might be a major hike in u.s. tax rates on dividends. >> the tax is one thing. just to be absolutely clear, you are only putting companies in who are buying back stock, right, and that's their principal activity with their free cash flow. >> buying back stock and netable sales. so there are big buy back that's occur, but they don't really reduce the number of shares because companies that issue options or sell shares on the other side of the ledger, so there is really no shrink in the number of shares. so we only look for companies that are shrinking the float and only using free cash flow to do so and not borrowing to buy. >> how do you know when to buy these stocks? do you have to wait for the company to make an announcement and then you have to buy? >> we look at what they've done over the last 120 days. so we only buy stock this is
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companies that have been shrinking the float aggressively. it averages about a 6% annualized rate in reduction in the number of shares. so you own a higher percentage of the total number of shares after the float than you did before. >> analysts say buy the company and reinvest the dividend. that's the way you get the best performance. >> except that doesn't work that way in reality. we say companies have an advantage in the stock market. they know a lot more than we do. so when top management decides that they think that reducing number of shares outstanding is the best use of excess cash on the balance sheet that comes from free cash flow, they're
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look to elevate the stock price and they know one of the reasons why the dividend payout ratio is declining is that they realize the float rate serves investors better in the long run than dividends. even though the theory is you should get dividends and reinvest them. but two-thirds own shares in taxable accounts. it's not efficient. >> charles, good to see you. thanks very much for joining us. >> thank you. coming up, president obama and mitt romney are face to face trying to take on undecided voters. well preview the presidential debate.
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here are the the headlines from around the world. >> president obama and mitt romney are set for round two of the president shal debates tonight with the task of winning over undecided u.s. voters. >> stocks in the green. u.s. banking sector, we'll hear from goldman sachs plus five dow components. >> roche has a strong performance of its breast cancer drugs. ceo says its performance will not be affected by the u.s.
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election. signs concern over the eurozone crisis are easing. wi contine continue to see in futures. still point highers but not by too much. ftse 100 among the major bourses adding half a percent here. still just below the 7300 level. the cac 40 adding about 0.4%. ibex 35, we did see closer to the 1.5% mark. now adding 1.2%. >> meanwhile the bell will sound
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tonight for round two of the presidential debates. president obama, mitt romney will face off at hofstra university in new york at 9:00 p.m. eastern. john harwood has a review of what we might expect. >> there's a tremendous a attention and pressure on the second presidential debate at hofstra university this evening. and that's because this race for president is extremely close. president obama was widely seen to have lost the first debate. >> okay. clearly we have something of an issue with that report. we'll have a panel take we're just warming up. >> they're putting on the boxes gloves right now. tre, what at this point is mitt romney -- how do you expect him to sort of come out tonight
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consistent with what we saw last week and is it in the same way when we talk about wall street expectations, the bar is now high for him, is that tougher for him to do as well as he did last time around? >> i don't think so. first of all, i think for your viewers, i think this is going to be a very important debate to watch because it will be very heavy on the economy, very heavy on taxes and specifically and i think finally discussing the elephant in the room which is the debt and this looming fiscal cliff that people are talking about about getting ready to go over. but the including thing is that you have the only undecided left in this country are the ones that will be in the audience at this town hall meeting debate tonight. most have made up their mind. so i think you'll see both candidates playing to their base, staying strong to what
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they believe in. so ite it's not going to be trying to appeal to their center voters. i think both candidates will state their ground far on the right and left on this. >> let's bring in ben, as well. do you agree most people have already made up their mind, and if they have, what impact will the debate actually have is this. >> we're talking about a very small slice of undecided voters, but there are still some persuadable voters. so i think you'll see romney continue to actually make more of a play to the center on taxes, not wanting big tax cuts for the rich. and president obama will push him saying this is not the mitt romney you'll actually get. and obama has to perform a lot better than he did last time
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which was pretty disastrous. >> if romney comes out the same way, how much sort of a momentum shift is that in this campaign? >> if romney outperformses the way he does and obama also underperforms the way he does in the last debate, you'll see more momentum for mitt romney. you'll see the swing states continue to move in his direction. i don't think that's going to happen. i think you'll see a lot stronger president obama come out, be more aggressive in going after romney on particular provisions of his tax plan and social security and medicare plans and i think you'll see obama do a lot better. i think romney will be good again. he always is. he's strong in debates. but obama will be more prepared and i think he'll sully present plans for a second term. he didn't really do that in the first debate. if he does that, he might shore up his numbers a little bit. >> and i want to add i think ben is right, i think you'll see certainly stylistically barack
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obama bring his a-plus game. but the key will be on substance. it's a town hall format, so you'll have real voters, real people asking these questions. it's not a moderator that maybe some of the tv viewers have an agenda or are engaging in the discussion themselves. so it won't be enough just to talk negatively about your opponent or try to scare the audien audience. you have to throw out real specific, talk to them about their challenges. and i think it will be stuff for both candidates. mitt romney will have to relate to those voters, but barack obama is, as well. >> you're both saying the president will be more aggressive, but with this format, i'm wondering whether it makes it harder to be aggressive. >> it does make it harder. because you're dealing with real voters asking these questions
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and you can't go immediately negative. so obama has to pivot a little bit from the question that a voter asks to a direct contrast with mitt romney on taxes, on entitlement spending, on plans going forward. he has to talk about what he would do. i think people are uncomfortable with the idea of an obama second term because they're not entirely certain what his plans are. how will he get the jobless rate to down, how will he deal with the debt and deficit that he didn't do in the first term. so his job is to say i'm going to do, a, b, c and d. >> if anything, the message from the last go round was that president obama was being too substantive and not focused enough or just not stylistically presenting himself.
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so i would almost expect more of a focus on style, on appealing to the voters stands in front of him than on giving us any con creed concrete detail. >> there's a mix of both that he has to pull off.con concrete detail. >> there's a mix of both that he has to pull off.on concrete detail. >> there's a mix of both that he has to pull off.n concrete detail. >> there's a mix of both that he has to pull off. concrete detail. >> there's a mix of both that he has to pull off. some specifics, but also act like he wants to be there. >> and you mentioned earlier that there are interesting numbers coming out here this morning. and i think barack obama will certainly point to some progress and success. whether you like it or not, and both parties don't, the unemployment number does have an influence in political outcomes in this country. so it will be important for mitt romney to not talk about what bad shape that we're in, to more so talk about we're not out of the woods and we need to prevent something like this from happening again and i have the best path forward to do it. >> i wonder if mitt romney's message is also complicated by
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the fact that the austerity line to a large extent, the republican party sort of stands for in the u.s., has lost some of its legitimacy around the rest of the world. not only does he not have the weak economy or as weak economy to point to, on the other hand, it may be tougher to sort of say here's what we need to do to get our finances in order when it's clear that even the icht mf have done an about-face. >> that's a great point and again, it goes to mitt romney being able to connect with voters and particularly these voters in the audience tonight. he needs to without getting too technical or too economical explain about the american dream, from the tap poistandpoi he has seen it, building he businesses which employ people, that help people money back into the economy. explain it in a way that's not highly technical, but that it's not a bad thing. everyone wants to have that
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dream and you needs to speak to the specifics of how to get there. >> and we will leave it there. tre and ben, thank you both for getting up early to join us. still to come, roche sees sales rising. we'll have all the details live next. bob...
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oh, hey alex. just picking up some, brochures, posters copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty. here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. save 50% on banners.
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welcome back. we've been focusing on the issue of gender. twitter is currently searching to add a woman to its all male board. it has been interviewing potential candidates, but none selected so far. main tech companies like google, apple and microsoft do already have women on their boards. meanwhile, one high profile female executive marissa mayer is back in the office at yahoo! after taking just two weeks for maternity leave. she wasted no time in making a big splash. she's hired a former google co-workers to be yahoo!'s new coo. so earlier we asked if gender should be a factor when choosing who to hire. mike tweeted in to say judge a
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better than not by gender, color or thinking but their ability. tom says twitter should have at least one level headed woman on its board and another viewer tweets in to say women are like jpmorgan, they don't need a bailout, but they'll take it anyway. so interesting thoughts there to say the least. if you want to join the conversation, you can e-mail us worldwide@cnbc.com, @cnbcwex. >> that last comment is kind of interesting. women don't need the help because they're smart enough to get to where they need to be. but if there is discrimination, they'll take it. kind of interesting. we'll let that one ride a little bit. let's turn our attention back to spain. you can see spanish banks actually are up. despite the fact s&p followed its downgrade of solve rip rave rating, lowering long term on 11
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banks. short term on four. santander has been assigned a negative outlook. a wider review will be done in november. spanish t-bill auctions raised more than expected and jeelds down lower than they were in september. if you're just joining us, these are your headlines. president obama and mitt romney are set for round two of their presidential debates tonight. mar receipts are in the green. goldman is up next this morning. and the euro is trading higher after sentiment ticked up in october. some shareholders wants to
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oust hooley. they're frustrated with the stock price and pace of cost cuts. they want new blood. last year nelson pelt sai peltz company should sell its asset management business. state street reports before the open take. and new york fed has sent thousands of libor related documents to congress in a second round aimed at showing the central bank took action to try to fix problems with the rate setting program. the house financial services committee has been investigating after the fed responded when it became aware big global banks were manipulating libor. latest documents include internal communications to the new york fed and e-mails and transcriptses betwe between thed uk regulators. >> starbucks coffee brewer will go on sales take. the company hopes to grab a share of the single serve coffee
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segment. meanwhile according to a reuters report, starbucks has been avoiding paying taxes in the uk ever since the company opened stores in the country in 1998. starbucks has been consistently reporting losses while telling shareholders the business was generating profits. the cfo told investors on the call that the unit was profitable after claiming losses. and pizza hut has backtracked on its presidential debate competition. they were offering a pizza for life, actually 30 years. or a cash alternative. however many complained the competition made a mockery out of the seriousness of the debate and the american democratic system. >> which in itself is so serious and substantial. >> my point, they would be right
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if you thought you were going to get a straight answer to a straight question. but on the basis i don't think you do. they may as well ask pepperoni or sausage. >> we've all been talking about it, so mission accomplished. >> i don't think it was such a bad idea. >> interestingly domino's reports earnings today. >> and they've moved it all online. pete sha hu pizza hut. so it's online. >> and the likes of 7-eleven, other chains trying to do stunts related to the election to help boost sales. >> on the other happened, if it does get people interested in the debate, you actually get people more interested in the real debate, maybe they're doing a favor, as well. >> right. that's the point. >> when we run the world some
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day -- >> it will be -- >> sausage or pepperoni. still to come, we'll preview johnson & johnson's third quarter figures.
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office of budget responsibility, set up to say whether the government was meeting it fiscal rules and debt targets, they said productivity has taken a longer lasting hit from the crisis. uk growths has been weaker than expected because of high inflation. but the more controversial statement which they say fiscal consolidation may also have done more to slow growth than they originally assumed, as well.
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so i would expect the opposition party will jump on in a obr flash to back up the points that they've been trying to make. meanwhile, strong sales of cancer medicines have helped give roche a boost in the third quarter. sales rose by 15% to just over $12 billion. which beat analyst expectations. this kicks off a health care segment. carolyn is with us in zurich. what's been the market reaction? >> not a whole lot of reaction. it's in line with how the market is trading. but still a solid set of numbers. the key driver was the oncology
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franchise. they accounted for 52% in the nine months leading up to september. so that is where we saw strong growth. on top of that, it's quite interesting, currencies also held because the swiss franc has depreciated against the dollar and euro and that did help the top line, as well. we talked to the ceo of this business this morning and we asked him what effect the fiscal cliff would have on the business in the u.s. and he actually said probably not a whole lot. we're still expecting moderate growth in the u.s., we're expecting double digit growth in emerging markets and declining markets in europe. >> okay, carolyn, thanks very much indeed for that. we'll also talk about j and j, as well. set to announce third quarter numbers. earnings expected to receive a boost from their recent acquisition. matt, thanks for joining us.
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what are your expectations with j and j? >> this is an unusual week for us in our space. we don't usually have that this many big issues that investors and markets will be focused on. not that medical devices isn't an exciting space. it's a terrific space. but it is unusual, four or so big events this week starting with j and j. and what i mean by big issues is for example ous in europe in particular, edwards pre-nounlgs t pre-announcement set back 6% or 7%. so the markets will be focused on everything and everything that jflt and jcht has to say this morning. >> and what we are looking at, it looks like the earnings per
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share of $1.21. to down from $1.24. where is the the top line growth, where is the earnings growth going to come from going forward? >> the deal was widely viewed as a good deal for the company. excluding that deal, we're looking at a low 2% or 3% grower. we put a preview out yesterday expecting modest up side from phrma. so focusing in on j and j and the results for the company should be good. it will be the read throughs for the rest of the space that a lot of people will be looking for. >> and the big question is the
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impact obamacare will have for them. assuming president obama is reelected, what would that mean for a j and j? >> that's another issue they're looking at this week. it's europe, utilization and the debates tonight and things like hospital capital spending. but the debates, it's widely viewed that governor romney has talked about wanting to appeal the accountable care act. the reality is if that act go, there's a med tech tax that impacts our space across the board. and i'd say a win for romney in today's debate would translate in to up side for my space across the board. >> okay. we'll keep an eye on it. matt, thanks very much for your time this morning. >> that's it forr e"worldwide
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exchange." we hope you have a roftable day.
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johnson & johnson, coca-cola and united health. from earnings to the which i. key reads on inflation, manufacturing and housing. plus your money, your vote. the second presidential debate is set for tonight on october 16th, 2012. it's also national boss day. so we send a shout out to all of our wives and other head honchos out there. "squawk box" begins right now. >> i have eight different

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